Enbridge Reaches $177 Million Settlement With U.S.

Enbridge Inc., a Canadian pipeline operator, will pay $177 million in penalty fees and better safety procedures in a deal with the U.S. government. The settlement is linked to one of the biggest inland oil spills in American history.

On Wednesday, the settlement was announced by Enbridge Inc., the Environmental Protection Agency, and the U.S. Justice Department. The agreement seeks to resolve violations against the Clean Water Act which arose from the failure of Enbridge’s Line 6B near Marshall, Michigan in 2010. This failure then caused roughly 20,000 barrels of oil to be spilled into a tributary of the Kalamazoo River.

The settlement also resolves another spill, also in 2010, in Illinois. The company is also obligated to pay no less than $110 million to come up with preventative measures against future oil spills and boost operations on its system of pipelines that runs through seven states in the Great Lakes area.

In accordance with the agreement, Enbridge Energy Partners out of Calgary will pay $61 million in fines for the Michigan spill. In addition to this, the U.S. subsidiary of Enbridge will shell out $1 million in fines for a spill of 6,400 barrels that occurred in Romeoville, Illinois in September of 2010.

Enbridge VP of U.S. operations, Brad Shamla, said that the deal, “won’t have a material impact on us from a financial perspective.” The company calculated the full cleanup cost as $1.2 billion. “We have accepted the penalties and, in fact, already enacted many of the safety measures set out in the consent agreement,” Shamla said during a call with reporters. He also said that Enbridge had already updated its safety protocol in the wake of the 2010 spills.

Last year, Enbridge got a $75 million settlement with the state of Michigan. The deal included the restoration of wetlands and state compensation for the amount spent on cleanup.

Per Enbridge’s latest settlement, the company must upgrade the maintenance and monitoring of its Lakehead system. Enbridge must also implement measures to protect and environment and communities that reside along the almost 2,000 mile pipeline. Finally, Enbridge must mount leak-detection and monitoring systems to avoid future issues that will be inspected by a third party.

Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division, John Cruden said about the deal, “This settlement will make the delivery of our nation’s energy resources safer and more environmentally responsible.” Many environmental organizations have expressed that Enbridge wasn’t punished severely enough and have demanded harsher penalties against offending companies in the future.

“A $62 million penalty and promises to maintain pipelines as a penalty for the worst inland oil disaster in U.S. history is woefully insufficient,” said Collin O’Mara, National Wildlife Federation president.